Cryptocurrency Hot-shot Speaker Series - Spring 2015

Cryptocurrencies, including Bitcoin and its successors, are a new technology that brings new opportunities and challenges for cybersecurity, and is poised to change the nature of online commerce.

The University of Maryland Cryptocurrency Hotshot Seminar Series (Spring 2015) is organized and hosted by the Maryland Cybersecurity Center, and features speakers from the cryptocurrency development and research community, as well as experts from computer science and economics. There will be six seminars throughout the semester. Topics will include the state-of-the-art and future directions in cryptocurrencies, and results from the nascent field of cryptocurrency science.

Vitalik Buterin is the inventor and founder of Ethereum, an ambitious project aiming to build a more versatile and powerful successor to Bitcoin. Vitalik was recently awarded the Thiel Fellowship, and raised over $20 million of funding for his project through a unique crowdsale campaign. He previously studied cryptography as an undergraduate at University of Waterloo. He also co-founded Bitcoin Magazine in 2011, and co-founded the Cryptocurrency Research Group, a non-profit organization promoting Bitcoin research.

Talk title and abstract:

"Tradeoffs in Cryptocurrency and Cryptoeconomics, and the Future"

Bitcoin was the first cryptocurrency, released by Satoshi in 2009, and it has seen massive success and has led to a large outpour of second-layer financial innovation, changed the lives of thousands of people, and led to massive, and often very embarrasingly public, stories of success and failure. But it is now clear that Bitcoin, and protocols on top of Bitcoin, cannot be everything for everyone. Particularly once stronger properties of security, scalability and functionality are demanded, there arise fundamental tradeoffs that ensure that achieving all goals at the same time is impossible, and so no single system will be able to capture everything that we want out of cryptocurrency and decentralized technology. What kinds of different approaches to security, scalability and functionality exist and what properties to they have? What are these tradeoffs? What can we have at the same time, and where do we need to compromise? And what will a cryptographic economy of the future truly look like?

James Grimmelmann is a Professor of Law at the University of Maryland Francis King Carey School of Law and a Visiting Professor at the University of Maryland Institute for Advanced Computer Studies. He previously taught at New York Law School and the Georgetown University Law Center. He holds a J.D. from Yale Law School and an A.B. in computer science from Harvard College. Prior to law school, he worked as a programmer for Microsoft. He has served as a Resident Fellow of the Information Society Project at Yale, and as a law clerk to the Honorable Maryanne Trump Barry of the United States Court of Appeals for the Third Circuit.

He studies how laws regulating software affect freedom, wealth, and power. As a lawyer and technologist, he helps these two groups understand each other by writing about copyright, search engines, privacy, and other topics in computer and Internet law. He is the author of the casebook Internet Law: Cases and Problems, now in its fourth edition. Other significant publications include Speech Engines, 98 Minn. L. Rev. 868 (2014), Sealand, HavenCo, and the Rule of Law, 2012 U. Ill. L. Rev. 405, and Saving Facebook, 94 Iowa L. Rev. 1137 (2009). He is a Contributing Editor for Publishers Weekly; he and his students created the Public Index website to inform the public about the Google Books settlement.

The technical benefits of blockchain and cryptocurrency technologies have often been linked to broader political claims that cryptocurrencies are inherently resistant to regulation. I will argue that the stronger forms of these claims are false; they rest on mistaken assumptions about the nature of law. The discretion and ambiguity built into law is a feature, not a bug: it is a crucial aspect of the interface between the crystalline world of software and the muddy reality of human affairs. The rules of Bitcoin derive ultimately from its users rather than from its protocols, and those users live in real places and depend on real governments. An obsessive focus on the double-spending problem obscures attention to the other work that offline payment and recordation systems do. I will discus what is and is not really new about Bitcoin with examples drawn from numerous fields of law.

Abstract: Behind the hype and tumult of the markets, researchers have been quietly producing a series of exciting results about Bitcoin and cryptocurrencies. In this paper we’ll explain why computer scientists should pay attention to these developments.

First, every machine with a Bitcoin private key effectively serves as a bug bounty that can be redeemed irreversibly and anonymously. These strong monetary incentives for attackers have exposed the inadequacy of current security practices and spurred new designs. These will likely have lasting positive impacts on security overall. Second, predicting the behavior of cryptocurrency participants has exposed limitations of game theory and mechanism design. However, as a real-world system that’s relatively "closed" and tractable, modeling Bitcoin's stability is an ambitious yet feasible goal. Third, Bitcoin has validated the concepts of secure global logs and globally distributed consensus as primitives, with an array of applications ranging from immediate, such as certificate transparency, to speculative, such as decentralized prediction markets.

Susan Athey is the Economics of Technology Professor at Stanford Graduate School of Business. Born in 1970, she received her bachelor’s degree from Duke University and her PhD from Stanford, and she holds an honorary doctorate from Duke University. She previously taught at the economics departments at MIT, Stanford and Harvard.

Her current research focuses on the economics of the internet, marketplace design, auction theory, the statistical analysis of auction data, and the intersection of econometrics and machine learning. She has focused on several applications, including timber auctions, internet search, online advertising, the news media, and virtual currency. She advises governments and businesses on the design of auction-based marketplaces. She has served as a long-term consultant for Microsoft Corporation since 2007, including a period as chief economist. She also serves as a long-term advisor to the British Columbia Ministry of Forests, helping to architect and implement their auction-based pricing system.

Abstract: This paper develops a model of user adoption and use of virtual currency (such as Bitcoin), and specifically incorporates the frictions created by Bitcoin. The theoretical model can be used to analyze how market fundamentals determine the exchange rate of fiat currency to virtual currency. Empirical evidence from Bitcoin prices and utilization provides mixed evidence about the ability of the model to explain prices. Further analysis of the history of all individual transactions on Bitcoin's public ledger establishes patterns of adoption and utilization across user types, transaction type, and geography.

Jonathan Levi - Stanford

Date: April 10, 2015 // Location: AVW 4172 // Time: 1:00pm

Jonathan Levi is a pioneer and visionary in the field of scientific computing and complex quantitative financial systems. Levi's work as a quantitative strategist in the financial services industry in London & New York where he worked for eight years for Standard and Poor's, Barclays Capital and Goldman Sachs on complex quantitative systems revolutionized the field. Prior to that time, he worked for the Israeli Defense Forces on mission critical, military grade cryptographic systems with zero error tolerance and Cisco Systems (Network Management Technology Group) on FIPS certification of the crypto code-base for the National Security Agency.

He is currently a researcher in Computational & Mathematical Engineering at Stanford University. Premised on the belief that no single model can capture 100% of the complex attributes of live securities markets - his current research focuses on analyzing large scale financial market data empirically to build systems that perform forensic analysis and learn about the intrinsic characteristics of financial markets.

In this session, “Cryptocurrencies vs. real-world finance: Are stability, liquidity, the ability to hedge the missing '99 percent' ?”, Levi will highlight issues from three of his popular recent presentations, "Small Errors in Big Data: White Noise or White Lies", "Practical Machine Learning: Theory, Practice, and the Challenges in Making These Two Meet", and "Theoretical Financial Mathematics Meets Real Data." The presentation will focus on the related challenges that should be considered in the context of financial quantitative analysis and crypto-currencies.

Jerry Brito and Peter Van Valkenburgh - Coin Center

Date: April 16, 2015 // Location: AVW 4172 // Time: 1pm

Jerry Brito is executive director of Coin Center, the leading non-profit research and advocacy group focused on the public policy issues facing cryptocurrency technologies such as Bitcoin. He also serves as adjunct professor of law at George Mason University.

Jerry has testified several times before Congress and state legislatures about cryptocurrencies, and regularly holds briefings for and consultations with policy makers. He is the coauthor of Bitcoin: A Primer for Policymakers, as well as other scholarly work on the regulation of cryptocurrencies. His op-eds have appeared in the Wall Street Journal, the New York Times, and elsewhere.

Peter is Director of Research at Coin Center. He drafts the Center’s public regulatory comments, and helps shape its research agenda. He has briefed policymakers and regulatory staff around the world on the subject of Bitcoin regulation. Previously, he was a Google Policy Fellow at TechFreedom and collaborated with various digital rights organizations on projects related to privacy, surveillance, and digital copyright law.

Title: Bitcoin and Cryptocurrencies: The Regulatory Landscape

Abstract: Bitcoin, as an Internet protocol and a peer-to-peer network, is largely outside the reach of regulation. Businesses and individuals who use the network, however, are subject to a panoply of regulations, many of which today are unclear and inconsistent. In this talk we will explain what uses of cryptocurrencies like Bitcoin are regulated and we will survey the different regulators and what actions they have taken to date.